Editor's Note: Todd posts his vibes in real time each day on
Buzz & Banter
Good morning and welcome back to the flickering pack. Following a
to all-time highs and
a few bites of humble pie
, we power up our weekly pup to find stateside stocks mixed as we
power up a fresh five-session set.
We often talk about our four primary metrics -- the "legs under the
trading table" that support profitable stock transactions. As I've
received a few inquiries about how they currently rank on the
metric totem pole, I figured I would list them in order of
Far and away the most important metric in today's marketplace.
Between the persistent government intervention and upwards of 70%
of volume generated by high-frequency trading, this is no longer
our fathers' stock market. Conventional wisdom dictates the
Greenspan put has morphed into the Bernanke call; there is a
difference between a stock market rally and a legitimate economic
continues to manifest via the devolution of social
The structural metric once focused on rates, credit, deficits,
currencies, and the like; these days, it's morphed into QE tapering
expectations and what is setting up to be an accounting showdown
between the Federal Reserve and Treasury
FASB 157 was the catalyst for the 2008 financial
-- before it magically disappeared -- we can expect the
intra-government agency machinations to help shape our forward
path, although this may be years in the future.
393 of the
(INDEXSP:.INX) companies have reported thus far this season; 55%
beat revenue estimates and 73% beat earnings (the discrepancy is
likely a function of cost-cutting). On average, companies are
beating by 2.2% (below average). Aggregate earnings growth is 1.7%
(vs .6% at the end of June). Materials, health care, and IT have
the highest percentage of companies beating EPS estimates while
telecom services and utilities have the lowest. For Q3, 61
companies have issues negative guidance while 16 guided higher.
4. Technical Analysis:
Typically the third-ranked metric -- in times of confusion, traders
tend to embrace this discipline -- the technical landscape remains
constructive over S&P 1675. The leadership (financials and
tech) is what you want to see, and we've seen more sector rotation
than outright migration, which is constructive on the margin.
Respect -- but never defer to -- the price
and remember that the last time consumer confidence was this high
was in the summer of 2007, per the chart below.
Net/net and bottom line, if the tape doesn't come for sale in
August, September, or October -- wide berth, I know, but I sense
we'll see it sooner than later, if it is to occur -- we could be
setting ourselves up for some performance anxiety (read: a long
squeeze) in November and December. In the nutty world of managing
OPM (other people's money), it's OK to lose money if other fund
managers (and the benchmark) lose more, but anathema to make money
if others make more.
- If you read one article on the
) programmer who was convicted of stealing code and sentenced to
eight years in federal prison,
this should be it.
Michael Lewis has always had a way with words.
- I'm watching the
) of the world for clues to our forward fuse. If they get all
(JDSU)-like, circa 2000 -- particularly with year-end performance
anxiety edging closer -- we would be wise to pay attention.
- NYSE internals are 9:5 negative (not yet at tell status); the
financials are soft (ex-Goldman Sachs, which trades well), as are
the metals. To that last point, I dusted off the gold vs. S&P
chart below for schnitz and giggles; if the past is a prologue,
either gold should rally or stocks should decline (or both).
- I usually do TV gigs when the markets are in turmoil; today,
I was asked to do a segment on the floor of the NYSE around 3:15
p.m. EDT with my pal Liz Claman over on Fox Business (FBN). I'll
be there; it remains to be seen what, if any, turmoil will
precede the segment
- Good luck this week and remember profitability begins